Shrinking Inventory May Indicate Housing Recovery Start

The national home supply is falling, down to its lowest levels since December 2008.

In June, there was 9.4 months of supply, down from a year-ago level of 11.0 months. It's one more sign that the housing market may be mending itself.

Housing supply is an important metric because home values across every U.S. market are rooted in Supply and Demand. When the supply of available homes outpaces buyer demand, home values tend to fall. And, by contrast, when homes are relatively scarce, values tend to rise.

We're still a long way from historical averages, but dwindling home inventory may be one reason why the national median sale price rose by $7,000 last month.

A reduction in inventory may also explain why two other popular home value metrics -- the government's Home Price Index and the private-sector's Case-Shiller Index -- are each showing signs of a rebound, too.

However, before we get too excited, it's important to remember that home sales of late have been spurred by low mortgage rates and by the First-Time Home Buyer Tax Credit. A real estate trade group says first-timers represent 29 percent of the market, for example.

But so long as rates remain low and buyer stimulus is in place, we can expect that the recent trends in real estate will continue. Inventory should continue to drop and prices should start to rise. And in a market like Philadelphia, where our inventory was not as large as some of the hard hit areas around the country, this may be even more significant. It would seem that for most home buyers, especially first time home buyers, now is certainly the time to act.

Therefore, if you're planning to buy a home in the next 12 months, buying sooner rather than later may be a smart way to save on your next home.

Watch Out for Foreclosure Scams!

The above video was creaed by the Federal trade Commission to help people understand that dangers they face when the stress of their situation allows them to fall prey to people who would take advantage of them.

Thanks to Jay Thompson at ThePhoenixRealEstateGuy for the tip!

Chemical Free Ways to Weed Your Lawn

In every yard and every garden, weeds happen. It's a fact of horticultural life.

There's no way to prevent weeds, but there is a proper way to treat and remove them. Chemical treatments like Round-Up are one option, but many gardeners prefer pulling weeds by hand. I only know these things from hearsay, since I am not, by any stretch of the imagination a gardener - however, through the magic of the Internet, I can find stuff to blog about and seem to be an expert - even if only an expert at finding things to share with you.

In this short video from Expert Village, Doug Smiddy shows us how to properly remove a weed by it roots to prevent regrowth. All it takes is a simple hand-tool to do the job right.

He also reminds us that having a weekly weeding schedule makes the job easier to finish.

How Your Settlement Date Can Lower Your Rate

Sometimes, saving money on your mortgage is as simple as picking a better closing date.

It's all about Rate Lock Commitments.

A Rate Lock Commitment is a bank's promise to honor a specific mortgage rate for a specific period of time. They are a lender's prediction of what mortgage markets will look like at some point in the future.

The future is murky, of course, so it follows that the longer the rate lock, the higher the bank's corresponding interest rate.

Banks have to compensate for "time risk".

Rate locks typically come in 15-day increments with the 30-day lock serving as the basis for all other pricing:

• 15-day rate lock : 1/8 percent lower than the 30-day rate lock


• 30-day rate lock : The basis for all other pricing


• 45-day rate lock : 1/8 percent higher than the 30-day rate lock


• 60-day rate lock : 1/4 percent higher than the 30-day rate lock

These aren't exact figures, of course. Spreads between rates can (and do) vary from lender-to-lender. On average, though, they're fairly close.

This is why choosing a closing date is so important to your mortgage rate. A 45-day closing may reduce your rate 0.125% versus a 46-day one.

Assuming a $250,000 home loan near today's rates, that's an annual difference of $236.

So, when negotiating a contract on a home, keep in mind how rate locks work to make sure you get the best rate possible. The shorter the length of your rate lock commitment, the more money you might save long-term.

A second money saving trick is adjusting your closing date towards the end of the month. At settlement you will pay interest from the date of settlement to the end of the month you settle in. For example, if you settle on the 5th of the month, you will pay 25 days interest. If you were to settle on the 25th of the month, you would only pay 5 days interest, reducing the cash needed at settlement by 20 days (or 2/3rds of your monthly interest payment). While this doesn't actually save money, it does help your cash flow at the time of settlement (when money always seems a little tight).

You might think it even smarter to settle on the last day of the month to minimize the interest payment, but with so many people trying to settle then, potential problems seem to pop up in timing which might end up with your settling on the 1st day of the following month if anything gets delayed, costing you even more cash than you wished - so keep a little cushion in there for surprises, and you should maximize your cash flow, have a few days to move before your next rental payment, and breath a little easier.

Things to Buy When the Economy is Slow

Down economies reduce consumer spending, creating a bind for retailers. As excess inventory collects dust, companies have little choice but to drop prices in hopes of selling more product.

For the bargain shopper with extra cash right now, there are some terrific deals to be had out there. This 4-minute piece from NBC's The Today Show highlights a few of them.

• Wines over $25 per bottle reduced up to 50%
• High-quality diamonds reduced up to 30%
• Summer rental homes reduced up to 50%

Furniture is another discounted item.

Now, these aren't everyday-type purchases, but when the economy turns around for good, the bargain-priced items highlighted in the video are expected to return to their former price levels.

If you have the means, therefore, consider taking advantage while costs are down.

REBarCamp Virginia Beach

I'll be sharing information and learning from my peers later this week at ReBarCamp Virginia Beach.

ReBarCamps are a phenomena that have swept the real estate industry this year after the initial event in San Francisco held in July 2008. They are "Un-Conferences" where the agenda is created the morning of the event by the participants. This year saw these volunteer driven events spring up in New York, Portland, Phoenix, Philadelphia, Fredricksburg, Denver, Los Angeles, Charlotte, Orange County, and Boston, with events still to come in Lynchburg, Columbus, and Miami.

If you haven't been to one, you ought to try to get there - Its free, its fun and its a great place to learn.

Case-Schiller Index Points to Stronger Market

Last Tuesday -- for the first time in a long while -- members of the press met the monthly Case-Shiller Index data with enthusiasm. And why shouldn't they? 19 of the 20 measured markets showed a slowing pace of home price decline in April.

Here are some of the headlines about the story:

• Case-Shiller Home Prices Decline Only 18% (Business Week)


• Case-Shiller Less Bad (Seeking Alpha)


• Home Prices In 20 Cities Drop Less Than Expected (Bloomberg)

Now, the headlines feel negative, but they're actually highlighting some key strengths in April's figures. For example, nearly half of the Case-Shiller markets posted gains in April and all but one showed month-over-month improvement.

It's a step in the right direction but doesn't mean that housing has turned around for good.

We have to be careful about how we interpret the Case-Shiller Index because it's an imperfect housing gauge. The most obvious Case-Shiller flaw is that it only measures home values in 20 cities nationwide and they're not even the 20 biggest cities.

Houston, Philadelphia, San Antonio and San Jose are excluded from the report and each ranks among the country's 10 most populous areas. Because of that, I usually don't like to quote the Case-Schiller Index, because we live in Philadelphia, and if our data is not included in the calculations, using it to discuss our market is an inherently flawed conversation.

That said, the report is still paid attention to nationally because the Case-Shiller Index is thought to identify broader housing trends and that helps to shape economic policy, and the idea of a single index is attractive to people writing about housing. And perhaps because this report is a positive report, and I am an inherently optimistic individual, I feel better about using the report to discuss the real estate market.

Not only versus last month but also versus last year, the pace at which home values are falling appears to be getting slower. This is the third straight month Case-Shiller has reported as such.

Now, three months makes a trend, but the data has to stay strong through the summer months to mark a bona fide turnaround. If the Case-Shiller Index shows strength for May and June, it could be the signal for which the markets have been waiting.

Can You Save the Planet When You Mow Your Lawn?

Motorized garden tools come in two varieties -- gas-powered and electric-powered.

If you take a close look, however, you'll notice that professional landscapers and gardening experts almost always choose the gas-powered types. This is because gas-powered garden tools both outperform and outlast their electric counterparts.

On the downside, they're an environmental nightmare.

According to the California Air Resources Board, a typical 5-horsepower, gasoline-powered lawnmower produces more pollution in 60 minutes of operation than a Toyota Prius produces in 800 miles of driving.

The environmental pollution created by lawn care products is one of the reasons why the Eco Trimmer by Lehr is getting such good buzz. As the first propane-powered garden tool, the Eco Trimmer combines the lawn care power of a gas-powered tool with the environmental accountability of an electric one.

The propane-powered tool emits 96 percent fewer carcinogens than a gas-powered tool and is completely non-toxic to ground and soil. Its performance is highly-rated, too.

The Eco Trimmer sells for about $200 on Amazon.com and is available in most major hardware stores. You can read more about the product and its environmental impact at the official Lehr website.

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Can You Buy More House Because of Higher Unemployment?

Last week's jobs report is the latest data point to drag down rates for today's home buyers and would-be refinancers.

As reported by the government, the national Unemployment Rate rose to 9.5 percent in June -- a 25-year high.

As the percentage of out-of-work Americans grows, households have less disposable income to pump back into the economy.

And so, because consumer spending accounts for two-third of the economy, the growing ranks of the unemployed are forcing markets to change expectations about when the U.S. economy will reach its full recovery.

Inflation is the enemy of mortgage rates. The perceived absence of inflation, therefore, can be its friend.

With fewer working Americans, we can expect slower economic growth plus a smaller probability for inflation over the medium-term. This is why mortgage rates are lower of late, off by as much as a half-percent from the peak.

Home affordability is up. And in a market like Philadelphia where prices have remained typically affordable, that may account for the additional activity we are seeing this summer as home buyers work towards attaining future security for their families through home ownership.

So if affordability is up, should you be looking to see what might be in your best interest?

Keep Your Grill Gassed up!

If you've ever been grilling for friends or family and emptied your gas tank mid-burger, you'll appreciate the GasWatch Propane Level Indicator and Safety Gauge.

For less than $20, the fits-most-grills appliance connects between the gas tank and the regulator, clearly displaying the propane left until a refill is needed.

When the needle falls to red, grillers can expect another 15 minutes of cooking until total flame out. The method is reportedly more reliable than the magnetic tank gauge method that involves pouring hot water down the side of the tank and reading a temperature-sensitive ink spot.

Additionally, if the GasWatch gauge senses a leak, it shuts down the flow of propane to keep the grill from catching fire.

July 4th is behind us, but there's lots of grilling left in the season. Pick up a GasWatch propane gauge at a local Home Depot or hardware store, or buy one online at Amazon.com.